<<SEMI charts [look at price vs btb or vs bookings. It's different alright>>
Before the last report, we had 8 consecutive month-on-month increases in bookings. This last report could be considered noise-in-the-signal; it takes several months to say the trend has changed.
But the collapse in the stock price, to new multi-year lows, could be foreshadowing a re-collapse in bookings. Remember how, way back in mid-2000, the stock price collapsed while bookings were still hitting new highs? It looked like a disconnect, for a while. I believe the relationship between bookings and stock prices has not been broken. It doesn't make any sense to me, that there could be a year-long time difference between when bookings and stock prices trough. In early-mid 2002, there was a hiatus in pushouts and capex estimate cuts, but now it's started up again. I still think the contract manufacturers are the bellwethers (or canaries in the mine). Cuts in capex plans by them is a worrisome sign.
Reevalusting things after my long vacation, I think my decision to go back to BuyAndHold this summer, was a mistake. Not just because stocks have gone down, but because there are multiple new signs of a W-shaped economic downturn:
1. the recent weakness in housing, in spite of record low interest rates
2. continued earnings warnings (I thought we were past the worst of it, but it looks like I was being Exuberant)
3. falling consumer confidence (again, I thought we'd seen the worst)
4. the government has done all they can do: Fed Funds below 2%, deficit spending of $200B in 2002. They can't do anything more, so there will be no (more) help there.
I think the semi cycle is going to be linked to the general economic cycle (it hasn't, in the past).
So, I'm a bit more willing to sell, than I was a couple of months ago. Still waiting for 20, to get out even; a double off the lows is not unreasonable, even if it's just one more bear rally. I can be patient with AMAT, because I bought stock, not LEAPs.
JS@livingondogfood.com |
